Refineries Renewed  – Phillips 66, Marathon move to renewable biofuels

Residents of East Bay refinery communities, public officials and environmental organizations had mixed reactions to recent surprise announcements by two Bay Area oil refineries: Phillips 66 said its Rodeo refinery will stop processing petroleum and switch to producing biofuel—made from living plants. It will also close its Rodeo carbon-processing plant. Days later, Marathon announced it would close its Martinez refinery and consider using it to produce biofuel.

“It’s really historic to see 50 percent of the refineries in Contra Costa make a decision to go from processing crude oil to renewable energy,” said Supervisor John Gioia. “It moves us in the right direction, knowing it’s not where we want to end up.” He added that, since the converted refineries will probably employ fewer workers, the county’s big challenge will be “to assist workers to find replacement jobs with equal pay [and create] pre-apprenticeship programs to get local people into jobs.”

Rodeo resident Maureen Brennan said, “I’m 60 percent excited for the community about this new technology and 40 percent worried. I’m happy to have less pollution from the refinery. I’m just suspicious.” She noted that Phillips 66 hasn’t withdrawn permit applications for “two tar-sands-related projects.” Nancy Rieser, another refinery neighbor, was skeptical about the refinery’s mention of “used cooking oil” as a raw material. She said she feared that, instead, rainforests in Brazil and Paraguay would be cleared for “industrial soybean production” to supply the biofuel industry.

And Greg Karras, author of a recent report calling for gradual decommissioning of California refineries, said the move to biofuel is a “strategy to protect oil companies’ stranded assets.” State and federal support for this strategy diverts resources from the real solution: electrification of transportation.

Phillips 66 announced that, starting in 2024, the refinery will become the world’s biggest producer of “renewable diesel, renewable gasoline, and sustainable jet fuel,” reducing the use of fossil fuel. The company said the change will cut carbon dioxide emissions from the refinery by 50 percent, sulfur dioxide by 75 percent and reduce pollution in general. The plant will produce 50,000 barrels of biofuel a day, compared to its current output of 122,000 barrels a day of petroleum products.

In addition, the project’s website, Richmond Renewed, says it “will provide high-paying family-wage jobs with healthcare benefits. Crude oil refinery workers will have the opportunity to transition to produce renewable fuels. Construction jobs for refinery conversion will help the county recover from the COVID-induced recession.”

The Phillips 66 biofuel project—and the possible project at Marathon in Martinez—reflect an oil-industry trend that started before the current economic problems. Many California policies have been promoting a move from fossil-fuel transportation. And environmental activists have been winning battles against planned fossil-fuel expansion. “There’s a lot about this project that’s way less terrible” than previous proposals, said Karras. San Luis Obispo County recently nixed a Phillips 66 plan to bring crude oil by rail from Canada’s tar sands to its Santa Maria refinery. And for years community opponents have stalled two Rodeo refinery proposals they say are also about tar sands: construction of propane and butane storage tanks and expansion of tanker traffic.

For starters, refinery neighbors and environmental organizations are focusing on making sure the county won’t approve the new proposal without a thorough public study. “To understand the details—local pollution shifts, where the feedstock will come from, how many millions of acres could be needed for soy, palm trees, you name it—there must be a full-scale environmental review combined with a 180-degree shift away from their planned tar sands expansions,” said Wilder Zeiser of Stand.earth.

Just Transition

Many are also concerned about the loss of jobs. Mike Miller, president of United Steelworkers Local 326, which represents workers at Phillips 66, said the company told him they could probably handle the reduction in jobs through attrition—10 or 20 people typically retire every year, Miller said, and “there are a lot of older people at our facility.” He added that when the company tells the union something, “most of the time they tell us the truth.” He said the company also mentioned the possibility of transferring workers to other Phillips facilities.

Supervisor Gioia reported that in his conversations with Marathon about its possible conversion to biofuels, managers estimated that the new plant would employ fewer than half of the number soon to be laid off from its Martinez refinery.

The problem, Gioia said, is that “the new jobs in the green economy aren’t there yet.” Many communities whose economies depend on fossil fuel, he said, are looking to the example of the electric-bus manufacturing plant recently opened in L.A. County. “Contra Costa is ground zero” for figuring out how to make a just transition from fossil fuels, Gioia said.

U.S. Representative Mark DeSaulnier said in a statement, “Workers must be taken into consideration and supported through [this] process—including with proper training, advanced warning, and jobs worthy of their skills. I have already begun and will continue to bring together local stakeholders to ensure that a transition away from fossil fuels does not leave anybody behind.”

In his report, Karras calls on governments to require fossil-fuel producers to pay up-front into a fund to help communities recover from their economic and environmental impacts and to provide income support and retraining for laid-off workers. Noting the support for biofuels from state and federal government, he said, “The project being proposed is so heavily subsidized that there’s every justification for holding the company responsible for making the workers and the community whole.”

In addition to jobs, neighbors are concerned about leftover toxic pollutants. Crockett resident Rieser said Phillips has “tanks of toxins and old oil sludge on both sides of Route 80. How will these be dealt with? Abandoned?” In addition to converting the refinery, Phillips 66 says it will close the nearby carbon-treatment plant, leaving another toxic site. A requirement to clean up the pollution, she said, should be a condition of any permit the county may grant.

Clean Fuel?

Biofuel helps reduce the amount of climate-disrupting carbon dioxide produced each year because it’s made from living plants. The carbon dioxide they absorb when they grow balances that emitted when they’re burned. “It’s probably true that biofuel will be some of what we need” to transition from a fossil fuel transportation system, Karras said. That’s because biofuel can be substituted for petroleum in existing vehicles and distribution systems, although for use in airplane engines, it must be blended with at least the same amount of petroleum fuel.

But according to the nonprofit Biofuel Watch, biofuel is “misleading as a climate solution,” for several reasons. One is that producing biofuel still releases carbon dioxide and toxic pollutants. Phillips 66 says the new facility will be 15 percent solar-powered, implying that the other 85 percent of the power will come from burning some kind of fuel.

Hydrocracking, the process Phillips 66 says it will use to produce biofuel, requires large amounts of hydrogen. And the refinery’s process for producing the hydrogen also produces large amounts of carbon dioxide, Karras said—along with health-harming pollutants.

In addition, burning biofuel in vehicles produces some of the same kinds of pollution as burning petroleum products, especially the “particulate matter” that causes the most harm to human health. A report from the National Institutes of Health evaluated research comparing the pollution from burning biofuel and petroleum. Results varied depending on the exact composition of the fuels, but in general the biofuels produced substantial amounts of particulate and other pollution, although less than petroleum. Low-income people of color are mostly likely to live near the refineries and freeways where those pollutants are concentrated.

A 2019 study compared two “pathways” for California to get off fossil fuel, one focusing on renewable fuels, the other on electrification of transportation. It estimated that the electrification pathway would reduce particulate pollution enough to avoid about 12,000 premature deaths a year. The renewable-fuels pathway would also avoid some premature deaths from particulate matter—but only about a quarter as many, 2,800 a year.

Land and Climate

The other big concern about biofuel is where the raw material comes from. Phillips 66 says it will be processing “used cooking oil, fats, greases and soybean oils.” But according to Biofuel Watch, the supply of used cooking oil is very limited. Phillips 66 has said that it will use soy oil from the Plains states, but these supplies are also limited. Many fear that the demand for soy and other biofuel crops is adding to the large-scale destruction of forests.

“Where biofuel production has been successful – using vegetable oils, corn, and sugarcane for example – the environmental and social consequences of vast new demand for these commodities has had severe and rippling effects on markets, food production, biodiversity, and human rights,” wrote Gary Hughes of Biofuel Watch. Destroying forests and soil to produce biofuel sometimes releases several times as much carbon as burning the fossil fuels they replace, according to a report from that organization.

State and federal policies heavily subsidize biofuels, according to Marijn van der Wal of Stratas Advisors, quoted in the Los Angeles Times story on the Phillips 66 announcement. Under the California Low Carbon Fuel Standard and the federal Renewable Identification Number program, producers of biofuel earn “credits” they can sell. They also get $1 per gallon through the federal Blenders Tax Credit program. Altogether, van der Wal estimated, this adds up to “about $3.32 a gallon . . . enough to cover production costs.”

Most American biofuel is produced in California “due to economic benefits under the Low Carbon Fuel Standard,” according to the US Department of Energy. But in a recent letter to the California Department of Energy, Biofuel Watch said this policy “locks in fossil fuel reliance” and “provides cover” for continuing the use of fossil fuel. That’s because it perpetuates the “liquid-fuel supply chain” and liquid-fuel vehicles. This “distracts from the imperative of deep transformation of our energy economy.”